Encyclopedia of Greater Philadelphia

Herbert Ershkowitz

Philadelphia Gas Works

The Philadelphia Gas Works (PGW), founded in 1836, was in 2015 the largest municipal-owned utility in the United States. While supplying residents with fuel for heating and cooking, PGW also became a flashpoint of controversy over whether such a utility should be owned by the city or operated by a private corporation. Although a number of cities in the United States own public utilities to provide electricity, Philadelphia is one of the few that sells gas to its citizens. A plan to sell PGW in 2014 stalled in City Council.

PGW originated in the 1830s from Philadelphia’s desire to catch up with other cities in providing gas lighting for streets, businesses, and homes. Although Philadelphia was the fourth-largest city in the country in 1837, it lacked a municipal gas works. In 1835, voters elected Samuel Vaughan Merrick (1801-70), an engineer and entrepreneur, to the Common Council to push Philadelphia towards building a gas works. Deeply involved in the city’s development, Merrick was one of the founders of the Franklin Institute and the first president of the Pennsylvania Railroad. After traveling to Europe to investigate municipal gas works, Merrick persuaded Council to charter a private company to build the works, but the Council retained the right to acquire it. Thus the experiment was to be started with private funds, but if it worked out, the municipal government could claim the gas works.

[caption id="attachment_16499" align="alignright" width="300"]The original coal fired Philadelphia Gas Works plant was built on the Schuylkill River betwene Market and Filbert Streets in 1835 using private funds. The city took control of the works in 1841. (Historical Society of Pennsylvania) The original coal-fired Philadelphia Gas Works plant was built on the Schuylkill River between Market and Filbert Streets in 1835 using private funds. The city took control of the works in 1841. (Historical Society of Pennsylvania)[/caption]

Merrick designed the plant himself for a location on the Schuylkill River near Market Street. Opened on February 8, 1836, the facility used Pennsylvania coal to produce gas. PGW delivered this gas within Philadelphia’s original boundaries, the area between Vine Street and South Street and between the two rivers. In the first few years of operation, PGW installed cast iron pipes about two feet below the city’s surface to bring gas to many of the outdoor lamps lining Philadelphia streets, giving a distinct look that came to define nineteenth-century cities. Hotels, stores, and other public places also quickly installed gas, which rapidly replaced oil for illumination. Private use of gas lighting grew more slowly because the cost of lighting homes was beyond the reach of the city’s working class.

City Assumes Ownership

Convinced of the gas works’ growing profitability, in March 1841 the Philadelphia government took over ownership of PGW. After Philadelphia’s consolidation with the county in 1854, PGW acquired the local companies in the annexed territory, extending its reach fully into the 129.7 square miles that made up the new city. By 1890, 1,500 public lights lit Philadelphia’s streets and two million lights lit private homes.

After 1860 PGW’s problems came not from the need to add customers, but from political changes in Philadelphia. Between 1860 and 1951, Republican political bosses controlled city government and used PGW’s board of trustees as a source of patronage. James McManes (1822-99), as head of the city’s gas commission, took kickbacks from contractors and employed a large number of the gas works’ 1,000 employees as election workers, allowing him to gain control over the Republican Party. Under his rule, PGW operated inefficiently, fell into debt, and as a consequence charged higher prices for gas to private customers than any other city.

By the late 1880s PGW’s operations had almost completely broken down. The Gas Commission was an independent agency, but its members, who were appointed by Council, were either Republican ward leaders or subservient to ward leaders. The commission refused to adopt numerous technical improvements in the production and distribution of gas. Costs to consumers were high for what proved to be an inferior product. Safety was not a priority, and accidents frequently happened. The status of the works became a national disgrace as journalists wrote about the “gas house gang” and the greedy politicians who ran the city through their control of PGW. The situation was not entirely unique to Philadelphia, as other cities such as St. Louis had political bosses who ran local public utilities for personal gain. However, when the journalist Lincoln Steffens wrote about bad government in American cities, he found Philadelphia among the most corrupt. During the Progressive Era, reformers in a number of cities removed ward leaders from control over public utilities.

Ownership Compromise

Trying to remedy the situation, in 1897 a broad movement among consumers and good-government groups in Philadelphia proposed selling the gas works to a private company. But political opposition to a sale resulted in a compromise. Philadelphia leased the system to the United Gas Improvement Company (UGI) for 30 years, renewing it every ten years thereafter until 1972. Under the arrangement, UGI sold the gas, maintained the production plants, and paid the city an annual rental fee, which averaged about $1.5 million through the first quarter of the twentieth century, rising thereafter with each new contract. UGI remained a Philadelphia corporation, whose leaders included a number of businessmen also involved in building the city’s transportation system. The company owned a number of local gas companies along the East Coast and during the 1920s was one of the largest utility holding companies in the United States.

[caption id="attachment_16621" align="alignright" width="232"]Philadelphia Gas Works' operation was marred by political corruption in its early years and was leased to United Gas Works. Mayor S. Davis Wilson (right) made one of many attempts to bring PGW's assets back under city control in 1938, an act that nearly incited a riot. (Library of Congress) Philadelphia Gas Works' operation was marred by political corruption in its early years and was leased to United Gas Works. Mayor S. Davis Wilson (right) made one of many attempts to bring PGW's assets back under city control in 1938, an act that nearly incited a riot. (Library of Congress)[/caption]

Although Republican bosses who controlled Philadelphia politics during the early twentieth century made several attempts to gain control over the gas works, PGW remained largely immune to corruption during its 70 years of operation by UGI. Gas usage expanded greatly. Even as more homes converted to electricity for lighting, they adopted gas for cooking, refrigeration, and heating water. Nevertheless, controversy periodically erupted over whether the city should take back control of this vital asset. The leaders of the Republican machine such as Boies Penrose (1860-1921) and William Vare (1867-1934) wanted more access to the gas works patronage and its valuable construction contracts. The most politically charged attempt to take over the gas works occurred in 1938 when Mayor S. Davis Wilson (1881-1939) tried to seize the company’s facilities despite a vote by the Council granting UGI a new lease. Before the dispute ended with an injunction from the state Supreme Court, Wilson sent the police to take over the gas works buildings. Hundreds of people, including PGW employees who were defending the plants against the police, were involved in the near-riot. After the court’s decision, UGI’s contract remained in place. Ironically, with the city unable to pay its operating expenses in 1938 because of the Depression, the Council used the gas works as collateral to borrow $40 million from a federal agency.

After World War II, PGW grew rapidly, with revenue of over $100 million by 1970. Change occurred as most residents and businesses adopted gas heating to comply with new pollution regulations, which largely eliminated coal for winter heating. To meet demand, PGW expanded its services by maintaining retail stores, operating a fleet of repair trucks, automating its billing system, and switching production in its own plants from coal to natural gas. Financially, PGW’s relationship with the city was complicated by Philadelphia’s dire budget needs. In 1965 the Council again used the gas works as collateral for a loan, and a few years later it secured an advance on payments from UGI.

Political Pressure to End Lease

[caption id="attachment_16501" align="alignright" width="196"]a postcard illustration of a white 12-story office building located at Broad and Arch Streets United Gas Improvement leased Philadelphia Gas Works from 1897 until 1972. UGI completed this building at Broad and Arch in 1899. Today it houses offices. (The Library Company of Philadelphia)[/caption]

Whenever the contract between the city and UGI came up for renewal, politicians used the occasion to urge the end of the lease. After 1951, the pressure came from Democrats, the new majority party in the city. In the 1960s, Controller Alexander Hemphill (1922-86), with considerable support within Council and among leading Democrats, led the opposition to granting a new contract.

In 1972, Mayor Frank Rizzo (1920-91) decided to end the contract with UGI and replace it by creating the Philadelphia Facilities Management Corporation to run PGW. The new municipally-run company served 556,000 customers and delivered the gas through 2,932 miles of gas mains. In its first days, the new company’s top managers were people who had worked for UGI before the lease expired, and the board included a number of distinguished Philadelphians.

From the start of PGW’s new status, it faced serious problems because of inflation, rising natural gas prices, and high interest rates on bonds for capital construction. Philadelphia also had serious fiscal difficulties and relied on the $15 million fee paid by PGW to meet its obligations. On several occasions, some of Philadelphia’s leaders suggested selling the facility. One major point of contention was gas rates, which many consumer groups believed were too high. Costs for the average homeowner rose from about $180 a year to $894 during the first 20 years of city control. Part of the rise in rates occurred because of inflation during the 1970s and part because of the disruption of energy supplies during the same period. But these national causes did not help ensure a smooth transition for the gas works to public operation.

After 1972, controversies over PGW became a regular part of Philadelphia’s political landscape. An additional concern about rates was the inability of persons living near the poverty level to secure heat during the winter. When City Council prohibited the termination of gas for such individuals, the loss of income was great enough to push the gas works close to bankruptcy and prevented its annual payment to the city. On several occasions, the city had to bail out PGW to help it pay its bonded indebtedness. Even when the $15 million annual fee materialized for the city’s benefit, PGW remained a source of controversy, such as the board’s decision to build a gas generating plant in the 1970s and 1980s that never was used.

The end of the UGI contract in 1972 further politicized PGW’s operations. One of Rizzo’s initial actions was to shift the law firm representing the gas works to a political ally. Additionally, the Gas Commission, composed of the controller, representatives of the mayor, and the Council, assumed control over PGW. Patronage began to play a part in the makeup of the workforce once again, and allies of mayors gained the business of sales of bonds and the contracts for legal work. In 1986 this mixing of politics with gas led the two most important officials from PGW to resign in a dispute with Mayor Wilson Goode (b. 1938). About the same time, PGW hired ex-mayor Frank Rizzo as its security director when he was attempting to regain his old office, a situation that prompted considerable controversy.

Over the last decade of the twentieth century and the first decade and a half of the twenty-first century, further political problems surfaced. Several major scandals led to the resignation of top leaders, and the question once again emerged: Could the city effectively run a public utility, or should it be sold to a private corporation? Mayor Edward Rendell (b. 1944) explored the issue in the 1990s, and Mayor Michael Nutter (b. 1957) in 2014 opened bidding to secure a sale. UIL Holding Company of Connecticut won the rights to buy PGW for $1.86 billion. Mayor Nutter proposed that the money be used to fill a very large hole in the city pension fund. But the Council rejected the offer as members expressed fears about the loss of control over what had been a source of patronage and funds for the city. Workers at PGW feared what a change in ownership would mean for their jobs. More generously, some expressed concern that poor city residents would lose their protection from having their gas turned off because of nonpayment of bills during the winter.

For almost two centuries, PGW remained a major institution in Philadelphia. But political disputes throughout its history often overshadowed PGW’s usefulness as a city-owned municipal facility. During the same period, cities such as New York and St. Louis sold off their gas works, which often were combined with electric companies as a means of providing easy billing for customers and clear regulatory control over rates. Philadelphia during this era faced a constant conundrum: Would its residents be better served by a gas works run by a city run utility or by a private company?

Herbert B. Ershkowitz is Professor Emeritus at Temple University and the author of three books and numerous articles on nineteenth- and twentieth-century American history. He wrote a 150-year history of PGW that is available in the PGW archives.

World War II

World War II, which created change for industries, populations, and politics in many urban areas in the United States, had a transforming effect on the Philadelphia region. Already industrialized, the region gained new impetus from government orders for supplies, armaments, transportation, and more. Philadelphia-area industries expanded, making the region a major “arsenal for democracy” during the war. With its federal Navy yard, arsenal, and universities, Philadelphia also developed and produced new materials, instruments of communication, electronic tracking, and weaponry. The availability of defense work in cities such as Philadelphia, Camden, and Chester opened opportunities for women and African Americans, including new migrants from the countryside and the South.  Much of the demographic movement was temporary, and it was sometimes convulsive, but it helped to redraw the social landscape of the city and region.

[caption id="attachment_2457" align="alignright" width="229"]poster reading "war industry needs water" Industry boomed to meet the demands of the war, and citizens were asked to do their part by conserving resources. (Library of Congress)[/caption]

The war had sometimes contradictory effects. For example, defense needs created more unity in the region than had existed since the early twentieth century.  People mobilizing for a war against Nazism in Europe and against Japanese expansion in Asia shared a common purpose, and they were further united by the effects of federal regulations governing work, consumption, and even entertainment. But the war also created social upheavals and it reduced local autonomy. Philadelphia’s Republican government, which had resisted President Franklin Roosevelt’s New Deal, now found that Washington controlled almost all aspects of city and regional affairs. For example, the federal government treated the area as a single entity for air patrols and air raid drills, and the air command for the whole region was located in the Philadelphia Naval Shipyard. Because of a labor shortage, the War Manpower Commission controlled the allotment of workers to industries in the whole metropolitan area. Other federal agencies with headquarters in Philadelphia managed many aspects of economic and social life in the region. The Office of Price Administration determined retail prices for most consumer products and allotted gasoline and heating oil for individual use. 

When the war broke out in Europe, Philadelphia, like the rest of the United States, had high unemployment and many empty factories caused by the Great Depression. After France fell to German armies in June 1940, the Roosevelt administration began a rearmament program that immediately boosted the city’s economy. By the time the Japanese attacked Pearl Harbor on December 7, 1941, Philadelphia industry had revived enough to mask a long-term trend of industrial decline.

Naval Shipyard Benefits

Most immediately, the Philadelphia Naval Shipyard, which had been in existence since 1801, benefited from the president’s commitment to building up the Navy. In 1940 and 1941 the Naval Yard also engaged in a clandestine reconstruction of British and other Allied ships damaged by enemy attacks in the Atlantic. The shipyard grew from a few thousand workers in 1939 to 58,000 workers at its peak. The yard even had a naval air field where workers produced aircraft and participated in the development of the first atomic bomb.  The Naval Yard’s rebirth benefited suppliers in the metropolitan area, and their work was supplemented by a number of shipyards on the Delaware River including the Cramp Yard in Kensington, the New York Shipbuilding Yard in Camden, and the Sun Shipyard in Chester. In 1944, these shipyards employed more than 150,000 workers and were the largest employers in the metropolitan area. The ships built on the Delaware River were the area’s most important contribution to the war effort.

Because Philadelphia and its suburbs had played such a prominent role supplying munitions in World War I, Washington turned to many of the same facilities for the new conflict.  The Frankford Arsenal, which dated from the early 1800s, hired 20,000 workers to manufacture small arms, ammunition, and optical devices.  It also engaged in munitions research. Local clothing manufacturers met the needs of the Army Supply Depot, and government turned to other Philadelphia industries to produce tanks, railroad equipment, and heavy weapons. The Baldwin Locomotive Company produced railroad equipment for the Allies and retooled some of its plants to make tanks. The Budd Company in Northeast Philadelphia, which in peace time produced bodies for automobiles, turned out armored cars, tanks, and other equipment.  Midvale Steel in Nicetown made armor for the Navy yards. The Radio Corporation of America in Camden, one of the area’s most important electronic companies, produced radios, radar, and other electronic and communications equipment needed by the military. 

[caption id="attachment_2461" align="alignright" width="221"]photograph of a woman stitching sleeves on an army overcoat At the Quartermaster Depot in Philadelphia in 1942, a woman stitches sleeves on an army overcoat. (Library of Congress)[/caption]

Roughly 350,000 Philadelphians engaged in defense work, and many thousands more worked in other parts of the region. Camden in New Jersey and Chester, Montgomery, and Bucks Counties in Pennsylvania had large defense contractors. Almost every able-bodied adult who wanted to work found a job, but racial, gender, and ethnic divisions affected when and where individuals found employment and their pay levels. African Americans, who had the highest rate of unemployment during the Depression, found opportunities especially after President Roosevelt issued an executive order prohibiting discrimination in defense hiring. The reluctance of employers to hire African Americans was reinforced by the opposition of labor unions. By the middle of 1943 the actions of the local office of the Fair Employment Practices Commission (FEPC) forced some of the largest defense contractors to reverse their policies. Since the jurisdiction of the FEPC extended over all of Pennsylvania and southern New Jersey, the largest defense contractors in the suburbs began hiring blacks. American Telephone and Telegraph, the Pennsylvania Railroad, and the Radio Corporation of America revised their hiring practices.

No Black Drivers

Discrimination remained entrenched at the Philadelphia Transit Company (PTC), which ran the buses, trolleys, and subways.  Despite repeated pressures from the federal government and local civil rights groups, the company and its union refused to allow blacks to work as drivers. In August 1944, when PTC finally hired seven African American drivers, the union called a strike that tied up the city for a week.  President Roosevelt sent in the military to run the transportation services so workers could get to defense jobs, and the government threatened to revoke union members’ draft exemption unless they ended the strike, which led to them returning to their jobs. Before the strike’s conclusion, many Philadelphians feared a race riot similar to the violence that had occurred in Detroit the previous year. But quick action by the NAACP and white civil rights groups, with the cooperation of the newspapers, prevented such an action.  Foreshadowing civil rights efforts that would continue after the war, black activism succeeded in pressuring government to end discrimination across the country, actions that were made possible because the nation needed African Americans’ labor and support. To challenge discrimination, black organizations worked with white civil rights groups to stage street marches and a newspaper campaign fostering the “Double V,” victory over the Axis abroad and victory over racism at home.

Employment discrimination was only one of many humiliations African Americans suffered during the war.  Like other cities, Philadelphia faced an acute housing shortage because of the influx of people looking for work.  This affected working-class areas especially as multiple families crowded into small houses, but African Americans lived in the most dilapidated houses of all, often without indoor plumbing.

Throughout the war, as more women entered the workplace, controversy raged over the “proper” place for women and the war’s effects on gender roles. For cultural, ethnic, and social reasons, many Philadelphians worried that letting women work in war plants would threaten the social structure. Several religious organizations charged that working mothers endangered their children. The conservative Republican city government echoed such concerns by refusing to create public day-care centers until near the end of the war. But the shortage of workers ultimately led the War Manpower Commission to recruit women for factories.  By 1945, 35 percent of Philadelphia’s women worked outside of the home. Most continued to fill jobs traditionally held by women, but many worked as welders, mechanics, and chemists in ship yards, in the Frankford Arsenal, and at the Pennsylvania Railroad.  Before the PTC agreed to hire African Americans as drivers, the company had employed a number of women in that position. 

Women and Charities

In a more traditional role, women volunteered to keep Philadelphia’s charities going.  The United Service Organizations (USO), which entertained military men in Philadelphia in such centers as the Stage Door Canteen in the basement of the Academy of Music and an open dance floor near City Hall, employed thousands of young women.  The USO reached out as well to numerous regional military bases and hospitals, including Fort Dix and the McGuire Air Force Base in New Jersey and military hospitals in suburban Philadelphia. Women were active in bond drives and in raising money for social organizations through the United War Fund.  In so many ways, women’s involvement in the war gave them their own money to spend, new responsibilities, and new confidence – all of which broadened their social, economic, and political expectations. At war’s end, most women lost or gave up their jobs to returning servicemen and many women settled into family life, sometimes with the benefits of the GI Bill and other federal programs that opened up developing suburbs. Despite a loss of influence that came when women were no longer “needed” in the workplace, their wartime experience laid the grounds for their demands for equal rights in subsequent years.

Although federal propaganda agencies emphasized unity as a necessity for victory, that unity was often missing in Philadelphia. Besides African Americans, other groups experienced discrimination during the war. During the Depression era, Jews often suffered job discrimination and even physical attacks.  These attacks increased from 1939 until 1941 during the debate in Philadelphia over whether the United States should remain neutral or provide aid to England and other Allied nations.  Opponents of aid charged that the Jews were trying to get the United States involved in another European war.  As the debate heated up, Jewish stores were often vandalized, Jewish children often were attacked coming home from school, and there was an arson attack on the home of a West Philadelphia rabbi. Even after Pearl Harbor, Jews continued to face discrimination from groups spreading anti-Semitic literature and practicing job discrimination. Despite service to the war effort on many fronts, Jews continued to face discrimination for years afterwards.

Although no massive relocation occurred on the East Coast to match the forced removal of Japanese from California, Congress classified recent immigrants from Germany and Italy who had not taken out citizenship papers as enemy aliens.  The FBI searched their homes and confiscated radios, telescopes, and other instruments regarded as potentially dangerous.  Several hundred enemy aliens were held for a time in a facility in southern New Jersey. Enemy aliens were not allowed to work in a defense facilities, which limited their employment opportunities.  Despite such restrictions, labor shortages resulted in an unusual occurrence in Cumberland County, New Jersey, as 2,500 Japanese Americans from internment camps in the West were allowed to settle in 1944 to work on the Seabrook Farms and frozen foods factory.  Some of them stayed after the war and formed a nucleus of Japanese presence in the region.

Labor strife proved to be another area in which federal efforts to maintain unity often failed.  Although nationally unions had agreed to a no-strike agreement, Philadelphia gained a reputation for strikes. During the Depression strikes in textiles and metal manufacturing were common and usually violent. This pattern continued through the war and affected private shipyards, steel mills, and aircraft factories.  City workers also went on strike for higher wages.  With the support of the War Labor Board, most disputes were settled by arbitration. Attempting to prevent inflation, the War Manpower Commission instituted a wage stabilization program capping wages at 1942 levels. Nevertheless, with full employment and with the average laborer working 48 hours or more a week, Philadelphia workers enjoyed a prosperity that was in sharp contrast to the Depression.  To circumvent government wage guidelines, unions often secured fringe benefits such as paid vacations and health benefits which lasted after the war.

City Autonomy Falls Victim to Feds

With all kinds of government controls and interference in Philadelphia’s affairs, the autonomy so valued by Mayor Bernard Samuel and the city’s Republican leadership largely disappeared. Decisions made by military commanders stationed in the city largely overturned local authorities. Because of the housing shortage and the refusal of the city government to build public housing, the commandant of the Philadelphia Naval Shipyard ordered the construction of the Tasker Homes in South Philadelphia near the base. By the end of the war, the city reluctantly agreed to build several public housing projects. The same disagreements occurred over civil defense. At first the city government was reluctant to play a role in civil defense, but right before the Japanese attack on Pearl Harbor it established a Defense Council headed by Mayor Samuel.  Particularly in the first two years of the war, the city was on high alert in expectation of an attack from the air. Periodically air raid drills tied up the city as air raid wardens cleared cars and pedestrians from the streets. A general blackout kept homes, stores, and businesses from displaying lights at night.

By early 1945 some of the industries with the highest employment began to lay off workers as the federal government prepared for the end of the war.  The shipyards were the first to face retrenchment. The Philadelphia Naval Shipyard reduced its workforce to almost pre-war levels. The Sun Shipyard closed much of its facility and threw thousands of African Americans out of work.  When the war ended in August 1945, almost every defense contractor laid off workers. The city never recovered. Many companies, such as Baldwin Locomotive and Budd, survived for a few years but lost out to competitors or in the case of Baldwin to changes in transportation that cut demand for railroad locomotives. The textile industry also collapsed.  There were a number of reasons for this failure. During the war the federal government had decentralized its purchases of cloth for uniforms by building factories in the South, where labor costs were lower. While hurting the city, decentralization benefited some of the Philadelphia region’s suburbs, where the War Production Board created new facilities in order to achieve maximum production.  For companies seeking factories after the war, this meant a better supply of more efficient facilities in the suburbs than in the city. After World War II Philadelphia’s reputation for labor strife also worked against it.  Philadelphia’s dominance in shipbuilding also disappeared.  By the time the Philadelphia Naval Shipyard closed in the 1990s all the other major shipyards in the Delaware Valley had shut down. Only one private shipyard survived in the early twenty-first century.   

The city of Philadelphia reached its population peak in 1945, but with fewer industrial jobs, its population declined.  Regionally, many new jobs were in suburban defense industries such as the Navy’s research center at Willow Grove or the Lockheed-Martin Manufacturing Company in Cherry Hill, New Jersey, or in the RCA facilities in suburban New Jersey. In the 1950 census Philadelphia had 2,071,605 people as a consequence of the war. By the 2000 census the population had declined to 1,517,550, a reduction of about 34 percent in 50 years. Although the 2010 census recorded a slight increase to 1,526,000, the longer-term loss in population made Philadelphia a smaller part of the nine-county metropolitan area surrounding it in Pennsylvania and New Jersey.  The city’s share of the population dropped from 60 percent in 1950 to less than 30 percent in 2000. In some ways the suburbs came to look upon the city as their poorer cousin, while the counties outside Philadelphia provided the dynamic economic growth for the region to remain viable.

Although World War II war caused many dislocations and cost the lives of 3,500 servicemen from the city and 1,500 dead from the Pennsylvania counties adjoining Philadelphia, many people look back on this era as a “golden age.”  They remember the city’s prosperity, the high wages, and the opportunities the war provided.  They remember wartime unity, however illusory, as a marked contrast to the racial and labor conflicts that followed.

Herbert Ershkowitz is Professor of History Emeritus at Temple University.

Share This Page: